FTI Consulting announced the launch of its India Disclosure Index 2018 this week, an annual report that tracks corporate disclosure practices amongst India’s top 100 publicly listed corporations. Communication and disclosure have become very key as the Companies Act of 2013, has made the two requirements a board oversight function. Therefore the 'The India Disclosure Index 2018' is a handy index that evaluates publicly available information in annual reports and corporate websites by the top 100 listed Indian companies to create a weighted, composite Voluntary Disclosure scoring system with 12 disclosure parameters and applied it to the S&P BSE 100 Index. FTI's research reveals an average composite Voluntary Disclosure score of 6.3 out of a maximum of 10, an average Board Quality score of 2.1 out of a maximum of 4 and an average Risk Disclosure score of 3.3 out of a maximum of 5 for all 100 companies.

Commenting on the India Disclosure Index 2018 findings, Amrit Singh Deo, managing director in the Strategic Communications segment at FTI Consulting, said, “Corporate disclosure quality is a good proxy for corporate governance in emerging markets. The fourth edition of the India Disclosure Index reflects regulatory changes and investor expectations on board governance, diversity, cybersecurity and sustainability disclosures, and boards and management teams should actively engage with investors on these issues. Greater transparency and better corporate governance can set Indian companies apart from emerging-market peers, which is imperative when companies are competing for global investments and capital.”

Indian Disclosure Champions

Nine companies are corporate disclosure champions, with 'Voluntary Disclosure' scores of 9 out of 10 or above. Only one of the nine corporate disclosure champions scored a perfect 10 out of 10:

Indian firms received a 'could do better' assessment on specific parameters such as the declaration of cyber and data risks, sustainability benchmarks and independent board evaluation as compared to ASEAN nations.

The index also shows that where the board quality scores such as gender inclusion are concerned, only 19% of the top 100 listed companies do not have women serving as independent directors on their Board of Directors.

Sector-wise disclosure performance

Aggregated by industry, telecom/tech companies have the highest average board quality score of 2.7 out of 4, followed by financials and consumer goods/services at 2.4 out of 4. Natural resources/energy and auto/transport scored the lowest, ( barring exceptions such as Vedanta and Tata Chemical ) with average board quality scores of 1.7 out of 4 and 1.8 out of 4, respectively.

When it came to risk disclosure parameters, again telecom/tech companies had the highest average risk disclosure score of 4.7 out of 5, this is followed by financials and natural resources/energy, both at 3.5 out of 5. Cement/construction and industrial/manufacturing scored the lowest, with an average risk disclosure score of 2.8 out of 5 and 2.9 out of 5, respectively. This inspite of construction firm ACC Limited being assessed as a disclosure champion.

Whistleblower mechanism

The report found that 20% of the top 100 listed Indian companies lack a convenient whistleblowing mechanism (phone number or email) on their websites or in their annual reports, compared to 29% in 2017 and 37% in 2016. In comparison, 45% of publicly listed companies in the ASEAN region lack a convenient whistleblowing mechanism on their websites or in their annual reports, according to FTI Consulting’s ASEAN Disclosure Index 2018, which was released in September.

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